A report by Zillow shows that the metro Denver area has the housing market with the fasting “cool down” rate outside of the biggest cities located in California. According to the rankings, the city has the fifth fastest housing market cool down behind Californian metro areas San Francisco, Los Angeles, San Diego, and San Jose. Behind it are some other large cities around the country, such as Seattle, WA, Portland, OR, Dallas, TX, and Sacramento, CA.
Zillow Estimates for Denver
To reach an estimate of how fast any market is increasing or decreasing in activity, Zillow looks at the share of housing listings that drop in price, the final sales price when considered as a share of the listing price, and any changes in the average amount of days that a given home stays on the market. Within this metro area, Zillow reported that 18 percent of Denver listings had their prices reduced in January, in contrast to 11 percent in January of last year. Homes were sold at about 97 percent of their list prices in the month of January 2019, whereas homes sold for 99 percent of their listed price for last January. On average, homes were taking 65 days to sell this past January, but only took 58 days during the prior January. It was these three Zillow measurements that when taken together show that Denver is fifth overall when it comes to how fast its housing market is cooling down. These changes in figures from year to year are not terribly distressing, but they indicate a possible negative trend.
Housing Market Affordability Over Time
The housing market became more affordable overall during the recovery process after the Great Recession of 2008. One of the markets that became the most affordable was the Denver market. Skylar Olsen, the economic research director of Zillow, mentioned that soaring housing prices led to down payments and mortgage payments that outpaced homeowners’ incomes. This led to the buyer demand for homes to run dry. Anticipated mortgage interest rate increases have led to negative impacts through the entire housing market.
Zillow’s report claims that for an average 30-year mortgage, the fixed mortgage rate mortgage will drop down to 5.8 percent, a rate comparable to the 2008 recession times. The result will be homes that are less affordable than they have been before, which won’t inspire confidence in newer buyers to buy new homes, and will simultaneously suggest to present homeowners to hold onto their low mortgage rates. The buyers who haven’t already been priced out of the market can take some time out to figure their next move, once more inventory becomes available and the listings take more time to move. Average home prices are expected to continue to grow, but the rate is projected to be quite a bit slower than years prior. Due to the overall market’s downturn, home prices should generally increase by only 2.2 percent in 2019.
